(Bloomberg) -- Norway’s inflation accelerated more than expected last month, calling into question Norges Bank’s long-awaited first interest-rate cut in two weeks.

Underlying consumer-price growth that excludes energy costs rose to 3.4% in February, the highest level in eight months, according to data from the statistics office on Monday. That topped the highest estimate in a Bloomberg survey with a median forecast of 2.9%, while Norges Bank projected a 2.7% gain.

The increase in headline prices also exceeded forecasts, mainly driven by electricity and food costs.

Norwegian policymakers have been the only ones in the G-10 sphere of major currency jurisdictions — aside from Japan — to still hold out on post-pandemic easing, though they’ve long-communicated a plan for a key-rate reduction at the March 26 meeting.

Monday’s data renewed bets that officials may yet again postpone the move, with their decision due to be announced a day later. An economic activity survey of Norges Bank’s regional clients, due next Thursday, remains the last key input ahead of that verdict.

Overnight swaps fluctuated as traders digested the information. Overall, they pared back expectations for a March cut, seeing a 71% chance for a quarter-point reduction versus 91% seen on Friday. Earlier in the day swaps showed a 51% probability. Traders now price in 29 basis points of cuts by August, down from 41 basis points.

“This inflation figure was so much higher than anticipated that Norges Bank need to think twice about cutting rates at all this year,” Nordea Bank Abp’s analysts Kjetil Olsen and Sara Midtgaard said in a note to clients. “The March cut is definitely off.”

DNB Bank ASA, Norway’s largest lender, also said “there is no need to remove the monetary tightening,” postponing its forecast for the first rate cut to September, according to senior economist Kyrre Aamdal.

The krone traded as much as 1.1% higher at 11.6345 versus the euro and headed for a sixth daily gain versus the dollar, the longest winning streak in two years.

“The krone has rallied on the heels of the data, but the currency has the potential to strengthen further in the face of what is likely to be a shallow cycle of rate cuts from Norges Bank. The krone is also well-placed historically among the G-10 currencies to make the most of any broad weakness in the greenback.”

—Ven Ram, Cross-Assets Strategist, Dubai

The inflation data, which mirrors development in neighboring Sweden, follows recent evidence that the economy is improving, including a decline in registered unemployment and strengthening in retail sales. The robust energy sector has outweighed the effects of credit costs at a 16-year high.

The most recent guidance from Governor Ida Wolden Bache has been that borrowing costs are set to be lowered three times by year-end, to 3.75%. While she is widely expected to revise that projection to show fewer cuts ahead, several analysts still doubt the latest data will derail the March move.

“Admittedly, the bar is high for the Norges Bank to backtrack on its guidance around a March rate cut, but the tone of the decision would likely be more hawkish than before and we do not rule out the possibility that the central bank could guide for an even shallower rate-cutting path,” Charlotte Ong, European FX Strategist with HSBC Bank Plc, said in a note. “This is even more so if we consider that increased German fiscal spending could have a positive spill-over impact on the Norwegian growth outlook as well.”

Kjetil Martinsen, Swedbank AB’s chief economist in Norway, also stuck to his projection of the March cut “as the trend for inflation is not materially challenged,” according to a note to clients. “On the other hand, we expect them to deliver a new rate path only signaling one more rate cut this year, during second half of the year — barring no large surprises in the Regional Network report out next week.”

The headline inflation rate also rose to 3.6%, a ten-month high. That’s well above the 2.6% forecast of the analysts and the central bank.

“We now doubt whether Norges Bank ‘dares’ to cut interest rates in March with these inflation figures,” Sparebank 1 Markets AS analysts Harald Magnus Andreassen and Dane Cekov said in a note to clients. They added they still think the bank will proceed with the March cut, but it will likely be the only one this year.

--With assistance from Joel Rinneby, Vassilis Karamanis, Ven Ram and Naomi Tajitsu.

(Updates with details, economist comments, market reaction from third paragraph.)